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on Labor Markets - Supply, Demand, and Wages |
| By: | M. Keith Chen; Katherine Feinerman; Kareem Haggag |
| Abstract: | Modern tech platforms provide workers real-time control over when they work, and increasingly, flexible pay: the option to be paid immediately after work. We investigate the labor supply effects of pay flexibility and the implications of present-biased preferences among gig-economy workers. Using granular data from a nationwide randomized controlled trial at Uber, we estimate the effects of switching from a fixed weekly pay schedule to Instant Pay, a system that allows on-demand, within-day withdrawals. We find that flexible pay substantially increased drivers’ work time. Furthermore, consistent with present bias, the response is significantly higher when drivers are further away from the end of their counterfactual weekly pay cycle. We discuss welfare and broader implications in contexts in which workers have the ability to flexibly supply labor. |
| JEL: | J0 J20 J3 R4 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33177 |
| By: | Silke Anger (Institute for Employment Research); Jacopo Bassetto (University of Milan); Malte Sandner (Nuremberg Institute for Technology) |
| Abstract: | While Western countries worry about labor shortages, their institutional barriers to skill transferability prevent immigrants from fully utilizing foreign qualifications. Combining administrative and survey data in a difference-in-differences design, we show that a German reform, which lifted these barriers for non-EU immigrants, led to a 15 percent increase in the share of immigrants with a recognized foreign qualification. Consequently, non-EU immigrants’ employment and wages in licensed occupations (e.g., doctors) increased respectively by 18.6 and 4 percent, narrowing the gaps with EU immigrants. Despite the inflow of non-EU immigrants in these occupations, we find no evidence of crowding out or downward wage pressure for natives. |
| Keywords: | Skill Transferability, Occupational Recognition, Immigrant Integration |
| JEL: | J24 J31 J62 F2 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2427 |
| By: | Muffert, Johanna (FAU Erlangen Nuremberg); Riphahn, Regina T. (University of Erlangen-Nuremberg) |
| Abstract: | Multiple job holding (MJH) is increasingly frequent in industrialized countries. Individuals holding a secondary job add to their experience, skills, and networks. We study the long-run labor market outcomes after MJH and investigate whether career effects can be validated. We employ high-quality administrative data from Germany. Our doubly robust estimation method combines entropy balancing with fixed effects difference-in-differences regressions. We find that income from primary employment declines after MJH spells and overall annual earnings from all jobs increase briefly. Job mobility increases after MJH spells. Interestingly, the beneficial long-term effects of MJH are largest for disadvantaged groups in the labor market such as females, those with low earnings, and low education. Overall, we find only limited benefits of MJH. |
| Keywords: | secondary job holding, moonlighting, Minijob, entropy balancing, investment motive, administrative data, fixed effects, difference-in-differences |
| JEL: | J22 J24 C21 M53 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17605 |
| By: | Michael W. L. Elsby; Axel Gottfries; Pawel M. Krolikowski; Gary Solon |
| Abstract: | We present a model in which efficient long-term employment relationships are sustained by wage adjustments prompted by productivity shocks and outside job offers. These wage adjustments occur only sporadically, due to the presence of renegotiation costs. The model is amenable to analytical solution, yielding new insights for several labor market phenomena, including: (1) key features of empirical distributions of changes in pay among job stayers; (2) a near-"memorylessness" property in wage dynamics whereby hiring wages have only limited influence on later wages and allocation decisions; and (3) a crucial role for recruitment and retention bonuses in sustaining efficient employment relationships. |
| JEL: | E24 E3 J3 J6 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33149 |
| By: | Anderlik, Jasmin (Ministry of Labor and the Economy, Vienna); Jumaniyozova, Malika (Johannes Kepler University, Linz); Schmidpeter, Bernhard (IZA, Institute for the Study of Labor, Bonn, RWI - Leibnitz Institute for Economic Research, Essen and Vienna University of Business and Economics, Vienna.); Winter-Ebmer, Rudolf (Johannes Kepler University, Linz, Institute for the Study of Labor, Bonn, Institute for Advanced Studies, Vienna and CEPR, Centre for Economic Policy Research, London) |
| Abstract: | Using linked vacancy-employer-employee data from Austria, we investigate how monopsony power affects firms’ posting behavior and wage negotiations. Consistent with theoretical predictions, we find that firms with greater monopsony power post lower wages and offer fewer non-wage amenities, suggesting that wages and non-wage benefits are complementary. However, we find no evidence that monopsonistic firms demand higher levels of skill or education. Instead, our results indicate that they require more basic skills, particularly those related to routine tasks. On the workers’ side, we find that employees hired in monopsonistic labor markets face significantly lower wages, both initially and in the long run. These lower wages are driven by both lower posted wages and reduced bargaining power, as well as reduced opportunities to climb the wage ladder later. |
| Keywords: | Monopsony, wage bargaining, job amenities, wages |
| JEL: | J42 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:ihs:ihswps:number58 |
| By: | Jansen, Laura (University of Groningen); Angelini, Viola (University of Groningen); Groneck, Max; van Ooijen, Raun (De Nederlandsche Bank) |
| Abstract: | This paper studies the impact of stronger employer responsibilities for facilitating work resumption of sick or disabled workers on employers' workplace accommodation efforts during sick leave. We exploit a reform in the Netherlands that altered experience rating – i.e., shifting the costs of sick leave and disability insurance to the firm – both for permanent and non-permanent employees. Using unique Dutch survey data on workplace accommodation of long-term sick-listed workers, we show that experience rating has no significant impact on accommodation efforts. Moreover, we provide evidence that the reform led to more firms opting for self-arranging both the sick leave benefits and the reintegration process of sick non-permanent workers, instead of using the public insurance scheme. |
| Keywords: | workplace accommodation, disability insurance, experience rating, employer incentives |
| JEL: | H32 I13 J14 J24 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17606 |
| By: | Gallo, Giovanni; Nagore García, Amparo |
| Abstract: | This paper investigates the retirement response to the pandemic and to the resulting acceleration in the adoption of new technologies. Using the European Union Statistics of Income and Living Conditions datasets and leveraging the natural experiment of many workers being forced to work from home in Europe during the lockdown, we compare the retirement response of older workers in digital occupations (i.e. more exposed to the accelerated adoption of new technologies) versus non-digital occupations to detect any differences in retirement behavior, which we interpret as digitalization effects. In addition, we analyze changes in retirement decisions by gender and geographic area. We find that retirement rates increased during COVID-19 in Europe, especially in Mediterranean countries and among women. This trend may be linked to gender occupational segregation. In Mediterranean countries, digitalization increases female retirement, likely due to challenges in balancing digital work and family responsibilities while working from home. In Eastern countries, and to a lesser extent in Northern countries, digitalization leads to postponing retirement among women, likely due to greater gender equality in unpaid work. In contrast, the retirement age for men is less affected by the pandemic with no significant differences between digital and non-digital occupations. This may exacerbate the existing gender gap in labor force participation and pension outcomes. |
| Keywords: | Remote working, Early retirement, Working conditions, COVID-19, Digitalization |
| JEL: | J14 J24 J26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1553 |
| By: | Redmond, Paul (ESRI, Dublin); McGuinness, Seamus (Economic and Social Research Institute, Dublin); Kelly, Elish (ESRI, Dublin) |
| Abstract: | Ireland is the only country in Europe with a direct question in its Labour Force Survey to identify minimum wage employees. By combining this with the longitudinal component of the Labour Force Survey, we examine the labour market transitions of minimum wage employees over a period of up to five quarters. After one quarter, just over half of minimum wage employees are still on minimum wage while 28 percent have moved to higher pay. After one year, almost half have moved to higher pay, with just one-third remaining on minimum wage. Employees that move to higher pay are more likely to change jobs compared to those that stay on minimum wage. Despite this, the majority (almost 90 percent) of minimum wage employees that transition to higher pay do so with the same employer. We employ a dynamic random effects probit model to estimate the degree of genuine state dependence of minimum wage employment. While there is some degree of true state dependence, much of the persistence in minimum wage employment is due to observed and unobserved heterogeneity, whereby minimum wage employees possess characteristics that result in them entering, and staying on, minimum wage. Our results also indicate that minimum wage employees are about five times more likely than higher paid employees to transition into economic inactivity. However, the majority of these are young people in education, and as such may not be overly concerning to policymakers. |
| Keywords: | minimum wage, state dependence, labour market dynamics |
| JEL: | J31 J62 J20 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17598 |
| By: | Oscar Becerra; Leonardo Fabio Morales |
| Abstract: | This paper analyzes the effect of payroll taxes on the formal sector labor demand in the presence of wage rigidity. In particular. We study the impact of a reduction of payroll taxes on the creation of formal jobs in Colombia, where about 40 percent of formal-sector workers earn the minimum wage. Using a reform that granted tax credits to firms hiring workers younger than 28 years of age, we obtain estimates of the effect of payroll taxes on formal-sector employment and wages. We show that payroll tax incidence is borne by formal-sector employers. The reduction in payroll taxes increased Formal-sector employment and did not affect wages. Using the estimation results, we recover an estimate of the elasticity of the formal-sector labor demand between −0.53% and −0.87%. **** RESUMEN: Este artículo analiza el efecto de los impuestos a la nómina sobre la demanda laboral en el sector formal en presencia de rigidez salarial. En particular, estudiamos el impacto de una reducción de los impuestos a la nómina en la creación de empleos formales en Colombia, donde alrededor del 40 por ciento de los trabajadores del sector formal ganan el salario mínimo. Utilizando una reforma que otorgó créditos fiscales a las empresas que contratan trabajadores menores de 28 años, obtenemos estimaciones del efecto de los impuestos a la nómina sobre el empleo y los salarios en el sector formal. Mostramos que la incidencia del impuesto a la nómina es soportada por los empleadores del sector formal. La reducción en los impuestos a la nómina aumentó el empleo en el sector formal y no afectó los salarios. A partir de los resultados de estimación, recuperamos una estimación de la elasticidad de la demanda laboral en el sector formal entre −0.53% y −0.87%. |
| Keywords: | Payroll taxes, formal employment, formal wages, labor policy, impuestos a la nómina, empleo formal, salarios formales, política laboral |
| JEL: | E62 H25 J21 J3 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:bdr:borrec:1297 |
| By: | David Neumark; Jyotsana Kala |
| Abstract: | We provide a comprehensive analysis of the effects of minimum wages on blacks, and on the relative impacts on blacks vs. whites. We study not only teenagers – the focus of much of the minimum wage-employment literature – but also other low-skill groups. We focus primarily on employment, which has been the prime concern with the minimum wage research literature. We find evidence that job loss effects from higher minimum wages are much more evident for blacks, and in contrast not very detectable for whites, and are often large enough to generate adverse effects on earnings. We supplement this work with additional analysis that distinguishes between effects of an individual’s race and the race composition of where they live. The extensive residential segregation by race in the United States raises the question of whether the more adverse effects of minimum wages on blacks are attributable to more adverse effects on black individuals, or more adverse effects on neighborhoods with large black populations. We find relatively little evidence of heterogeneity in effects across areas defined by the share black among residents. But the large disemployment effects for blacks coupled with strong residential segregation imply that that adverse effects of minimum wages are concentrated in areas with high concentrations of blacks. |
| JEL: | J23 J38 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33167 |
| By: | Martinez, Tomás R. (Insper, São Paulo); Martins-Neto, Antonio (World Bank); Mello, Ursula (Insper, São Paulo) |
| Abstract: | This paper presents ten new facts on gender and top lifetime earnings inequality in Brazil, drawing on rich administrative data covering nearly the entire formal labor market from 1985 to 2018. We document significant gender disparities in lifetime earnings, particularly among top earners, where women are both underrepresented and face larger earnings gaps compared to men. We identify key drivers of this inequality, including labor force participation, occupational segregation, employment in large firms, and job-switching patterns. Public sector employment partially mitigates these gaps. |
| Keywords: | life cycle earnings inequality, gender earnings gap, top earners |
| JEL: | D33 J01 J30 J45 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17602 |
| By: | Bogdan Savych; David Neumark |
| Abstract: | We estimate the causal effect of attorney involvement on the indemnity benefits workers receive after their injuries. To address the fundamental challenge that claims and injuries may differ on unmeasured dimensions that affect both attorney involvement and benefits received, we propose and use two instruments. The first is the baseline local area attorney involvement rate derived from a subset of claims for fractures, lacerations, and contusions without permanent partial disability and/or lump-sum payments. The second instrument is a delay in the first indemnity payment. Our outcome is the total indemnity benefits that workers receive after their injuries, which captures payments to workers for time lost from work and other adverse effects of an injury. Our analysis of more than 950, 000 claims with more than seven days of lost time indicates that attorney involvement substantially increases total indemnity benefits paid to workers. |
| JEL: | I18 J38 K31 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33210 |
| By: | Joep Konings; Aaron Putseys |
| Abstract: | We assess how subsidies for on-the-job training affect firm performance. Using a difference-in- differences research design, we find that these subsidies positively influence firm size, wages, and productivity. Over four years, employment increases by 3.55%, value added by 5.68%, and labor costs by 3.60%. Average wages and labor productivity grow by 1.95% and 2.12%, respec- tively. In the first year of treatment, a notable discrepancy exists between the wage (1.21%) and productivity (2.18%) effects, indicating incomplete rent-sharing. These positive effects are primarily seen in smaller firms, which significantly increase training expenditures and hours in the year they receive subsidies, resulting in more trained and skilled workers. Larger firms do not show similar effects, highlighting the possibility that these firms relabel existing training ac- tivities to take advantage of the training subsidy program. Additionally, we find that subsidies focused on training in human resource management, logistics, and business skills drive these positive outcomes for firm size at the firm level. |
| Keywords: | Productivity, Programme evaluation, SMEs growth, Training subsidies |
| Date: | 2025–01–10 |
| URL: | https://d.repec.org/n?u=RePEc:ete:ceswps:757420 |
| By: | Milene Tessarin; Ron Boschma; Deyu Li; Sergio Petralia |
| Abstract: | This paper presents an evolutionary perspective on regional development traps that centers around the structural inability of regions to develop new and complex occupations. Using European Labor Force Survey data, we follow occupational trajectories of 237 European regions and provide evidence on which regions are trapped, what kinds of traps they have fallen into, and which regions have managed to escape such traps. We find a clear-cut divide in Europe: almost all non-trapped regions are in Northern and Western Europe, while trapped regions are found primarily in South and Eastern Europe. However, this geographical divide does not apply to all types of regional traps. Our results also show that regional development traps are persistent: regions often remain in the same trap, but not always. Our study suggests a feasible pathway for low-complexity regions to overcome a development trap is by building capabilities in related occupations and then diversify into complex occupations. Once complexity levels are high, regions tend not to lose their complexity. |
| Keywords: | regional development traps, evolutionary traps, occupations, relatedness, complexity, low complexity trap, structural trap |
| JEL: | J24 J82 R11 O15 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2501 |
| By: | Giovanni van Empel (Australian National University); Daniel Avdic (Deakin University); Umair Khalil (Deakin University); Johannes S. Kunz (Monash University); Bo Lagerqvist (UCR and SCAAR Study Group, Uppsala University); Johan Vikström (IFAU and Uppsala University) |
| Abstract: | We study spillovers in healthcare by exploring how cardiologists’ treatment choices are influenced by their peers. We employ clinical quality data from Sweden on the use of radiation in diagnostic angiography procedures. To account for endogeneity concerns, we instrument peers’ weekly radiation output using the plausibly exogenous arrival of emergency cases they handle. Our estimates suggest that focal cardiologists increase their radiation output by 0.7 standard deviations for each standard deviation increase in their peers’ output. These workplace spillovers lead to improved quality of care. Focal physicians detect additional blocked arteries, which increases treatment intensity and leads to lower risk-adjusted patient mortality. |
| Keywords: | peer effect, team management, physician practice style, healthcare quality |
| JEL: | D83 I11 I12 J24 M12 M54 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:mhe:chemon:2025-01 |
| By: | Jonathan D. Ketcham; Nicolai V. Kuminoff; Nirman Saha |
| Abstract: | We develop a new revealed preference framework to estimate the value of statistical life (VSL). Our framework starts from a hedonic model of health care in which heterogenous individuals choose how much to spend on medical services that reduce mortality risk. Their choices generate an equilibrium survival function that can be differentiated to recover their marginal willingness to pay for mortality risk reduction. Our IV estimator uses survey data on Americans over age 66, linked to their federal administrative records. The mean VSL is approximately $1 million at age 67 and increasing in health, income, education, and life expectancy. |
| JEL: | Q51 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33165 |
| By: | Patrick Kline (University of California, Berkeley) |
| Abstract: | This paper reviews the literature on firm wage differences and the fixed effects methods typically used to measure these differences. High wage firms tend to be more productive, larger, more sought after by workers, and to employ more credentialed and higher wage workers. The latest evidence suggests high wage firms also tend to offer better amenities and are prone to outsourcing and mass layoffs. Reviewing the requirements of the “AKM model†of Abowd, Kramarz, and Margolis (1999), I provide a graph theoretic interpretation of the restrictions this model places on the wage changes of workers who switch employers and examine the extent to which they are satisfied in a benchmark dataset. Assumptions are provided that give these wage changes a causal interpretation and I discuss some difficulties that arise in aggregating them into a global ranking of firm wage levels. In reviewing the econometrics of variance decompositions, I argue that attention ought to focus on effect sizes rather than variance shares, which can be difficult to compare across datasets with different noise levels. Cross-fitting and clustering methods for addressing limited mobility bias are reviewed. A series of bounding and imputation exercises suggest the network pruning typically used in conjunction with cross-fitting methods has little effect on estimands of interest. A review of the latest international evidence finds that the bias corrected standard deviation of firm effects tends to be substantially elevated in less developed countries. Variance estimation methods for second step regressions of firm effects on covariates are reviewed and illustrated with an empirical application to the firm size wage premium. Finally, I discuss connections between the AKM model and the celebrated sequential auction framework of Postel-Vinay and Robin (2002a), concluding with some areas for future work at this intersection. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2429 |
| By: | Egerod, Benjamin C. K.; Stuckatz, Jan; Mueller, Michael |
| Abstract: | How do firms employ political connections to deal with their non-market environment? To answer this question, we provide the most comprehensive empirical examination of firms' employment of former public officials -revolvers- to date. Building on a rich literature in management and political science, we argue that political skills and connections of revolvers are multidimensional, non-substitutable, and complementary. We investigate the role of revolvers using comprehensive data on the universe of revolvers on boards and in senior management of U.S. publicly traded firms. First, we show that 56% of publicly traded firms employ revolvers and that companies frequently employ multiple revolvers. Second, revolver hiring and roles in firms crucially depend on the revolver's background. Firms hire different types of revolvers in response to different shocks to their non-market environment, and the arrival of a revolver increases the firm's propensity to lobby. Finally, we find that revolver arrivals increase firm financial performance, which is partly driven by federal contracts, and that multiple different types yield higher returns. Our results have implications for the strategic linkages between corporate non-market strategies, the returns to political connections, and effective hiring in top-level companies. |
| Keywords: | Revolving door, Executives, Corporate boards, Non-market strategy |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:cbscwp:308817 |
| By: | Katharina Laske; Nathalie Römer; Marina Schröder |
| Abstract: | We introduce the word illustration task (WIT), a novel experimental task to quantify performance in an idea generation context. Between treatments, we vary whether or not piece-rate (PR) incentives are implemented and the degree to which these incentives are aligned with the desirable outcome. We show that PR incentives have a positive impact on the number of innovative ideas, i.e., the number of ideas that are of high quality and original. We find that unweighted PR incentives (PR provided for any idea) perform at least as well as more aligned weighted PR incentives that are additionally contingent on the quality and/or originality of ideas. Our results suggest that when it comes to fostering idea generation, it is sufficient to incentivize trying instead of incentivizing succeeding. |
| Keywords: | idea generation, real-effort experiment, incentives, creativity |
| JEL: | C90 J33 M52 O31 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11594 |
| By: | Liang Zhong; Angela Crema; M. Daniele Paserman |
| Abstract: | We develop a model of discrimination that allows us to interpret observed differences in outcomes across groups, conditional on passing a screening test, as taste-based (employer, ) statistical, or customer discrimination. We apply this framework to investigate the nature of non-white underrepresentation in the US motion picture industry. Leveraging a novel data set with racial identifiers for the cast of 7, 000 motion pictures, we show that, conditional on production, non-white movies exhibit higher average revenues and a smaller variance. Our findings can be rationalized in the context of our model if non-white movies are held to higher standards for production. |
| JEL: | J15 J70 L82 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33186 |
| By: | Pierre Cahuc (Sciences Po) |
| Abstract: | This article provides an overview of the economic literature on short-time work. It presents the main characteristics of short-time work since its emergence in Germany in the 1930s. It analyzes its effectiveness as a job preservation mechanism, drawing on theoretical models and empirical studies. It concludes by highlighting the areas that future research could explore to address the most significant gaps in our understanding of short-time work. |
| Keywords: | Short-time work, furlough, employment, working hours |
| JEL: | J23 J41 J63 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2432 |
| By: | Mary A. Burke; Nathaniel R. Nelson |
| Abstract: | This report investigates a variety of factors that may explain why New England experienced a participation recovery gap from 2019 through 2023 and discusses the resulting policy implications. |
| Keywords: | New England; labor force participation rate; COVID-19; population aging; retirements |
| JEL: | J21 J26 J11 |
| Date: | 2025–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedbcr:99455 |